The reporting guidance for the 10th principle against corruption is made by Transparency International, and sets the framework for how to create a proper COP (Communication on Progress) about a company's actions against corruption. It is used both as a policy platform (i.e. the basic principles of the reporting) and as a practical framework (i.e. a concrete model of the required elements in the report).
The United Nations Global Compact was originally founded upon request by the former UN secretary-general Kofi Annan in July 2000 in New York. It is a policy initiative that sets up a concrete framework for the companies that have signed the agreement which consists of ten principles related to different areas in ethical and sustainable business operating, such as human rights (principles 1-2), labour (3-6), the environment (7-9), and anti-corruption (principle 10). The UNGC is a voluntary initiative that has so far brought together thousands of companies from more than 145 countries, making it the largest CSR-related initiative in the world.[1]
The primary goal of the principles mentioned above is to encourage companies to make the world a better place for all stakeholders involved, while still keeping the businesses profitable. The goals are, however, not written in stone but rather aiming at encouraging discussion and learning, as well as long-term sustainable development towards a more responsible way of doing business.[2] The ten principles have their roots in other UN conventions (such as the UN Convention Against Corruption or the Declaration of Human Rights). The first nine principles were accepted the same time as the Global Compact itself, while the tenth principle (against corruption) was introduced in 2004.[3]
The 10th principle
Having stated that corruption is not only a problem for the public sector, the leaders and executives involved in the UNGC agreed on adding the 10th principle to the framework, getting the private sector more involved in the fight against corruption. The primary goal of the principle is summarized on the website of the UNGC as following:
"The adoption of the tenth principle commits UN Global Compact participants not only to avoid bribery, extortion and other forms of corruption, but also to develop policies and concrete programs to address corruption. Companies are challenged to join governments, UN agencies and civil society to realize a more transparent global economy."[4]
Furthermore, the UNGC encourages its participants to fight corruption by anti-corruption programs; by reporting in the annual COP how the company contributes to the anti-corruption work; and by cooperating with other companies as well as other stakeholders in the fight against corruption. All participants of the UNGC are required to issue an annual COP where they report on how they have implemented the ten principles, and if this requirement is neglected, the company might be excluded from the UNGC.[5]A milder way for UNGC to take actions towards companies that have not fulfilled the requirements regarding the COP is to change their status to "non-communicating", which happened i.e. to the Finnish media company Alma Media in October this year when they did not send in their COP.[6] Then, if the company does not send in their COP within one year after getting the non-communicating- status, it will get excluded from the UNGC.
Reporting guidance on the 10th principle
The framework contains 22 different reporting elements on the company's commitment & policy, implementation, and monitoring, arranged by different reporting levels (basic - desired).[7] The 7 basic reporting elements are the ones that companies have to report against, while the other 15 are available for companies to report against in order to enhance the quality of their reports. By using a clear framework for the COP, the companies participating in the UNGC will reach not only better internal understanding on the company's anti-corruption policy, but also better reputation for the company. Furthermore, all companies using the same framework for their reports will make it easier for all stakeholders to read and compare the reports with other companies' reports or the same company's reports from earlier years.
The categories for the report are, as mentioned earlier, as following:
1) Commitment and policy In this category, the company reports on the organization's commitment to anti-corruption. In short, this category consists mainly of following the corruption-related laws, committing to actively fight corruption, and having a formal policy against corruption.
2) Implementation What the company actually does to implement their strategy against corruption. This implies taking relevant actions against corruption, having a captainship that actively fights corruption, informing the company's employees about the anti-corruption policy, and doing internal checks on the process on a regular basis.
3) Monitoring How the implementation is monitored and how the company strives to constantly improve their business in a way that aims at fighting corruption. This is done by continuously monitoring the process, and taking proper action if areas with room for improvement are found.
Criticism
The whole process with using COP for reporting companies' actions against corruption has been widely criticized, mainly because both the requirements on the companies, and the UNGC's process for going through the reports are considered inadequate. First of all, the entire report is made solely by the company and only one issue for improvement is sufficient to fulfill the requirements made by the UNGC. Secondly, the entire staff of the UNGC consists of less than thirty people while there are thousands of COP annually to review. Thus, the reviews of the individual reports will inevitably be made carelessly, especially when the UNGC refuses to include any kind of criticism made by civil society organizations in their public reporting. The partnership between the company and the UNGC will then be seen only as a way to enhance the reputation of the company, a phenomenon that is commonly referred to as bluewashing. [8] Furthermore, violenting the anti-corruption principles will not automatically lead to any punishment for the company.
For example, GlaxoSmithKline has been a member of the UNGC since 2007, and therefore committed to the 10th principle (among others). They have always submitted their COP in time and according to the requirements, stating, for example, that they will integrate "Internal checks and balances to ensure consistency with the anti‐corruption commitment".[9]However, this year, GSK was accused for paying bribes to Chinese doctors and hospitals for promoting GSK products.[10] As mentioned above, this will not automatically lead to any sanctions from the UNGC.
Table: Matrix of reporting elements, Source: (Transparency International 2009: 16)
Hoessle Ulrike (2014):The Contribution of the UN Global Compact towards the Compliance of International Regimes: A Comparative Study of Businesses from the USA, Mozambique, United Arab Emirates and Germany. Journal of Corporate Citizenship. 53, pp.33
Available at http://search.proquest.com.libproxy.helsinki.fi/docview/1516043578?accountid=11365. Fetched on 9.10.2014
Introduction
The reporting guidance for the 10th principle against corruption is made by Transparency International, and sets the framework for how to create a proper COP (Communication on Progress) about a company's actions against corruption. It is used both as a policy platform (i.e. the basic principles of the reporting) and as a practical framework (i.e. a concrete model of the required elements in the report).
Table of Contents
History
The United Nations Global Compact was originally founded upon request by the former UN secretary-general Kofi Annan in July 2000 in New York. It is a policy initiative that sets up a concrete framework for the companies that have signed the agreement which consists of ten principles related to different areas in ethical and sustainable business operating, such as human rights (principles 1-2), labour (3-6), the environment (7-9), and anti-corruption (principle 10). The UNGC is a voluntary initiative that has so far brought together thousands of companies from more than 145 countries, making it the largest CSR-related initiative in the world.[1]
The primary goal of the principles mentioned above is to encourage companies to make the world a better place for all stakeholders involved, while still keeping the businesses profitable. The goals are, however, not written in stone but rather aiming at encouraging discussion and learning, as well as long-term sustainable development towards a more responsible way of doing business.[2] The ten principles have their roots in other UN conventions (such as the UN Convention Against Corruption or the Declaration of Human Rights). The first nine principles were accepted the same time as the Global Compact itself, while the tenth principle (against corruption) was introduced in 2004. [3]
The 10th principle
Having stated that corruption is not only a problem for the public sector, the leaders and executives involved in the UNGC agreed on adding the 10th principle to the framework, getting the private sector more involved in the fight against corruption. The primary goal of the principle is summarized on the website of the UNGC as following:"The adoption of the tenth principle commits UN Global Compact participants not only to avoid bribery, extortion and other forms of corruption, but also to develop policies and concrete programs to address corruption. Companies are challenged to join governments, UN agencies and civil society to realize a more transparent global economy."[4]
Furthermore, the UNGC encourages its participants to fight corruption by anti-corruption programs; by reporting in the annual COP how the company contributes to the anti-corruption work; and by cooperating with other companies as well as other stakeholders in the fight against corruption. All participants of the UNGC are required to issue an annual COP where they report on how they have implemented the ten principles, and if this requirement is neglected, the company might be excluded from the UNGC. [5] A milder way for UNGC to take actions towards companies that have not fulfilled the requirements regarding the COP is to change their status to "non-communicating", which happened i.e. to the Finnish media company Alma Media in October this year when they did not send in their COP.[6] Then, if the company does not send in their COP within one year after getting the non-communicating- status, it will get excluded from the UNGC.
Reporting guidance on the 10th principle
The framework contains 22 different reporting elements on the company's commitment & policy, implementation, and monitoring, arranged by different reporting levels (basic - desired).[7] The 7 basic reporting elements are the ones that companies have to report against, while the other 15 are available for companies to report against in order to enhance the quality of their reports. By using a clear framework for the COP, the companies participating in the UNGC will reach not only better internal understanding on the company's anti-corruption policy, but also better reputation for the company. Furthermore, all companies using the same framework for their reports will make it easier for all stakeholders to read and compare the reports with other companies' reports or the same company's reports from earlier years.The categories for the report are, as mentioned earlier, as following:
1) Commitment and policy
In this category, the company reports on the organization's commitment to anti-corruption. In short, this category consists mainly of following the corruption-related laws, committing to actively fight corruption, and having a formal policy against corruption.
2) Implementation
What the company actually does to implement their strategy against corruption. This implies taking relevant actions against corruption, having a captainship that actively fights corruption, informing the company's employees about the anti-corruption policy, and doing internal checks on the process on a regular basis.
3) Monitoring
How the implementation is monitored and how the company strives to constantly improve their business in a way that aims at fighting corruption. This is done by continuously monitoring the process, and taking proper action if areas with room for improvement are found.
Criticism
The whole process with using COP for reporting companies' actions against corruption has been widely criticized, mainly because both the requirements on the companies, and the UNGC's process for going through the reports are considered inadequate. First of all, the entire report is made solely by the company and only one issue for improvement is sufficient to fulfill the requirements made by the UNGC. Secondly, the entire staff of the UNGC consists of less than thirty people while there are thousands of COP annually to review. Thus, the reviews of the individual reports will inevitably be made carelessly, especially when the UNGC refuses to include any kind of criticism made by civil society organizations in their public reporting. The partnership between the company and the UNGC will then be seen only as a way to enhance the reputation of the company, a phenomenon that is commonly referred to as bluewashing. [8] Furthermore, violenting the anti-corruption principles will not automatically lead to any punishment for the company.For example, GlaxoSmithKline has been a member of the UNGC since 2007, and therefore committed to the 10th principle (among others). They have always submitted their COP in time and according to the requirements, stating, for example, that they will integrate "Internal checks and balances to ensure consistency with the anti‐corruption commitment".[9] However, this year, GSK was accused for paying bribes to Chinese doctors and hospitals for promoting GSK products.[10] As mentioned above, this will not automatically lead to any sanctions from the UNGC.
Table: Matrix of reporting elements, Source: (Transparency International 2009: 16)
UN-NGLS (2009): United Nations Global Compact Office. Available at http://www.un-ngls.org/spip.php?page=article_s&id_article=847. Fetched on 7.10.2014.
Hoessle Ulrike (2014):The Contribution of the UN Global Compact towards the Compliance of International Regimes: A Comparative Study of Businesses from the USA, Mozambique, United Arab Emirates and Germany. Journal of Corporate Citizenship. 53, pp.33
Available at http://search.proquest.com.libproxy.helsinki.fi/docview/1516043578?accountid=11365. Fetched on 9.10.2014
The UN Global Compact (2013): About us. Available at https://www.unglobalcompact.org/AboutTheGC/index.html. Fetched on 7.10.2014.
The UN Global Compact (2013): Global Compact principle 10. Available at https://www.unglobalcompact.org/AboutTheGC/TheTenPrinciples/principle10.html. Fetched on 7.10.2014
The UN Global Compact (2013): What is a COP? Available at https://www.unglobalcompact.org/COP/index.html. Fetched on 7.10.2014.
The UN Global Compact (2014): Alma Media corporation. Available at https://www.unglobalcompact.org/participant/15394-Alma-Media-Corporation. Fetched on 9.10.2014.
Transparency International (2009): Reporting Guidance on the 10th principle against corruption, pp.12-13. Available at http://issuu.com/transparencyinternational/docs/2009_ungc_reporting_guidance_en/17?e=2496456/2117779. Fetched on 7.10.2014.
S. Prakash Sethi & Donald H. Schepers (2013). United Nations Global Compact: The promise-perfromance Gap. Journal of Business Ethics, pp. 206. Available at http://download.springer.com/static/pdf/320/art%253A10.1007%252Fs10551-013-1629-y.pdf?auth66=1412790252_f0321ca031388ba68daa4a0c80102f3a&ext=.pdf. Fetched on 8.10.2014.
GlaxoSmithKline (2012): COP, p 5. Available at http://www.gsk.com/media/267962/United-Nations-Global-Compact-Communication-on-Progress-2012.pdf. Fetched on 9.10.2014.
BBC News: GlaxoSmithKline fined $490m by China for bribery. http://www.bbc.com/news/business-29274822